The dollar hits a new low against the Euro :(

Sure thing, Tesla.
1) You are right only in a sense. If there were inflation with no or negative economic growth and high unemployment, you would be absolutely right, we would be getting robbed. However, that is not the case.
GDP growth and inflation are directly related while inflation is inversely related with unemployment (of course, there's been times where we've had high inflation and high unemployment, i.e. stagflation.).
An economy cannot grow and grow without any consequences; there is always a trade-off, namely between inflation and unemployment.
Solution? Well, go look up "communism" and see how well that went.

2) To be very technical, the Fed does not print money. The Bureau of Engraving and Printing does that (which is part of the Treasury Department). The Fed has the authority to issue them. I am telling you this to clarify that there is absolutely no way that this money can mysteriously end up in the pockets of people who work for the Fed.
The Fed does not decide how much money is in circulation, the market does.
The Fed only determines whether there's too much or too little money in circulation in order to take appropriate action.
If the Fed feels that there's not enough money in circulation, it is fearing that unemployment is too high (or going to be too high). Now, the Fed can do three things:
1. Lower the Discount Rate (I'm sure you're familiar with this)
2. Engage in Open Market Operation; Sell Government Securities in the Open Market
3. Lower the Required Reserve Ratio (this rarely happens, so we won't discuss it)
Notice that "print money and dump it in the market" is not an option?

3) This makes absolutely no sense. Go back to ECON101.

4) It doesn't matter since our currency is neither backed by silver nor gold.
Your going on again about printing money. As long as inflation and unemployment are balanced, and GDP is showing steady growth, it doesn't matter. That's how we became a $13 trillion economy. The poor in 1913 couldn't afford shit. Now, they can afford cars and cable TV.

5) Ok, do you understand the difference between fiscal and monetary policies? The ones in charge of fiscal policy are the ones responsible for the budget and trade deficits.

6) We are not experiencing a hyperinflation today, so I'm not sure what your point is. We are facing a recession, and thus deflation is right around the corner.
The money supply has been increasing overtime yet we've still experienced deflation in the past, so yes, before you say that there's too much money in circulation for a deflation to occur, I'm telling you to go take some ECON classes.

 

Tesla is the arbiter of how much money should be in circulation.

 

No, it is the Federal Reserve, but don't worry we have a "free market."

Oh wait, no we don't:

http://divisionoflabour.com/archives/004047.php

 

Actually, it makes a lot of sense. It is pretty simple: when you have too many paper dollars in circulation, the paper money loses value............does that make sense? How hard is that to understand? It is called supply and demand. When the supply of dollar is high the value of the dollar goes down. When the supply of the dollar is low, demand goes up. I think kids in elementary school get this, apparently you don't.

Which one is more valuable, sand or gold? Come on dude...........its called scarcity. The dollar is being devalued because there is too much, almost a trillion dollars, its a no brainer........

Your technicalities add no strength to your argument. The Fed issues the money, but it "technically" doesn't print it. Umm, it doesn't matter, the Fed is part of the source....where the money comes from, so they do control the amount of money in circulation, since they issue it. Issue, print, it is essentially the same thing.

 

Tesla I agree with your logic, I'd just like to see some sort of math or calculations to justify that the current amount fits that scenario.

 

Well, I'm not a professional economist or mathematician, but even if you understand basic supply and demand, as well as inflation, you can easily see why ReadyToGo is wrong. Guys like him try to use complicated jargon and terms to support their arguments and throw off opponents, but this does very little. He makes fun of me for talking about how many dollars are in circulation, but instead of explaining why I'm wrong, he just tells me to go take an econ 101 class.

I make it simple, direct, and easy to understand. I would suggest looking at some of the work of Paul Craig Roberts or Joseph Stigliz and their thoughts on the economy. If I didn't have people like this in agreement with my views, I couldn't mount an argument. But when you think about it from their perspective, and you look at history, it makes perfect sense.

No economy that is based on paper money and credit will survive. Governments always print too much, and inflation is the end result. I challenge ReadyToGo to name one paper currency not backed by Gold or Silver that has existed for the last 500 years. I know he won't be able to meet my challenge, because there is not a single paper currency that has lasted this long.

Here are some articles for further readings. This is easy to understand. No paper currency has lasted more than 500 years. Gold and Silver have been around for like 4,000 years. There is a reason for that, and the reason is that Gold and Silver are true stores of value that can't be printed, and printed, and printed, because they are scarce, and you have to work hard to mine it. This is the true and most fair money you could ever use.

An ounce of Gold today can buy you 350 loaves of bread. In the Middle Ages, an ounce of Gold could STILL buy you 350 loaves of bread. Now lets try that with the dollar. If you could get a brand new car for $1995 during the 1960s, can you still get a brand new car today for $1995? No, because the U.S. dollar has been devalued, too many dollars are in circulation, and the price of a brand new car today is much higher. For hundreds of and thousands of years, Gold and Silver have beat the crap out of every paper currency ever introduced.

Devaluation:
http://en.wikipedia.org/wiki/Currency_devaluation

Fiat Currency, also known as Paper Money
http://en.wikipedia.org/wiki/Fiat_money

Store of Value: Something that has a true value, unlike the Dollar, which has a Zero intrinsic Value
http://en.wikipedia.org/wiki/Store_of_value

Gold as an Investment:
http://en.wikipedia.org/wiki/Gold_as_an_investment

Silver as an Investment:
http://en.wikipedia.org/wiki/Silver_as_an_investment

 

Again, the problem is that you don't understand that there is a trade-off.
Here, let me dumb it down for you: You cannot always have good things. If money supply isn't increased, an economy is stagnant. If money supply is increased, there is inflation. HOWEVER, THAT IS HOW OUR (AND NEARLY EVERY COUNTRY'S) ECONOMY IS DESIGN TO GROW.

You took what I said out of context. I told you why I gave you that information.
Perhaps you should work on your reading comprehension skills as well.

 

I'm not sure if you are familiar with the history of human civilization, but 500 years is a long time within the context of our existence on earth. Adam Smith wasn't even around 500 years ago.
However, I can tell you that gold standard didn't last nearly as long in the United Stated BECAUSE IT WAS A FAILURE. In fact, no country on earth practices it due to it's limitations.

 

Wikipedia defines inflation real well, and here is the definition:

Inflation is an increase in money supply, excluding the increase caused by economic growth. This may cause a persistent rise in the general price level as measured against a standard level of purchasing power.

This basically proves me right and Ready2Go wrong. Inflation is an increase in the money supply, like I said, because the government prints to much, and what did the definition shows happen in a situation like this? A persistent rise in prices against the standard level of purchasing power. Prices go up, and people become more poor.

 

Link to evidence which supports this. In any healthy economy, there needs to be balance. No too much money, not too little money. Real basic stuff.........too much is inflation, too little is deflation...........I never said there wouldn't be any inflation, I said there is TOO MUCH inflation. You get the difference? When you have too much inflation, the Middle Class gets wiped out.

A failure? Give a historical example of when Gold failed. I can give you a bunch of examples when paper money failed. Here are a few historical examples:


Angola
Angola went through the worst inflation from 1991 to 1995. In early 1991, the highest denomination was 50,000 kwanzas. By 1994, it was 500,000 kwanzas. In the 1995 currency reform, 1 kwanza reajustado was exchanged for 1,000 kwanzas. The highest denomination in 1995 was 5,000,000 kwanzas reajustados. In the 1999 currency reform, 1 new kwanza was exchanged for 1,000,000 kwanzas reajustados. The overall impact of hyperinflation: 1 new kwanza = 1,000,000,000 pre 1991 kwanzas.

Argentina
Argentina went through steady inflation from 1975 to 1991. At the beginning of 1975, the highest denomination was 1,000 pesos. In late 1976, the highest denomination was 5,000 pesos. In early 1979, the highest denomination was 10,000 pesos. By the end of 1981, the highest denomination was 1,000,000 pesos. In the 1983 currency reform, 1 Peso Argentino was exchanged for 10,000 pesos. In the 1985 currency reform, 1 austral was exchanged for 1,000 pesos argentino. In the 1992 currency reform, 1 new peso was exchanged for 10,000 australes. The overall impact of hyperinflation: 1 new peso = 100,000,000,000 pre-1983 pesos.

Austria
Between 1921 and 1922, inflation in Austria reached 134%.

Belarus
Belarus went through steady inflation from 1994 to 2002. In 1993, the highest denomination was 5,000 rublei. By 1999, it was 5,000,000 rublei. In the 2000 currency reform, the ruble was replaced by the new ruble at an exchange rate of 1 new ruble = 1,000 old rublei. The highest denomination in 2002 was 50,000 rublei, equal to 50,000,000 pre-2000 rublei.

Bolivia
Bolivia went through the worst inflation between 1984 and 1986. Before 1984, the highest denomination was 1,000 pesos bolivianos. By 1985, the highest denomination was 10 Million pesos bolivianos. In 1985, a Bolivian note for 1 million pesos was worth 55 cents in US dollars, one-thousandth of its exchange value of $5,000 less than three years previously.[3] In the 1987 currency reform, peso boliviano was replaced by boliviano which was pegged to U. S. dollar.



Now, name some examples when Gold or silver failed.............The photo below shows the ultimate fate of any paper currency that is not backed by precious metals:

 

Just to let you know I'm not the thick brick you might think - I am well aware of these things. However 1) I'm in a very secure government job that never gets laid off in a depression
2) I know how to grow my own food and feed my family if required
3) I have no debts
4) I live in Australia (yes I'm aware we are in a global economy)
5) I'M NOT AN AMERICAN

 

Well, you don't have to much to worry about. It is the U.S. that is about to suffer a massive economic decline. It will effect other countries, but we will face the worse problems. I'm not sure about Australia.

Sorry about that. I thought you were an American citizen. But a depression doesn't help the economy of any country, whether it is Australia or the U.S.

 

I believe the next depression will be a deflationary depression. I believe it will make the great depression (30% unemployment) look like a candy store. I believe that most families are in much more debt than pre-great depression families thanks to credit cards. True unlike pre-great depression mortgages the banks can no longer require 100% of your mortgage back on demand (the main reason why the great depression became so bad), but if you miss mortgage repayments you will have your house sold from under you - foreclosed still. As millions will be in the same boat the housing markets will collapse and rich well place individuals will run around buying up enough land and property on the cheap to return us to a feudal like system (i.e. where a few Lords own all the land and the rest of us are just 'tenant farmers' - nice word for 'slaves'.

Have another look at the great depression and you will find that some clever individuals made an absolute fortune out of it.

I also predict like the last depression the only way out will be a world war which will come when the governments have no other answers. I predict based on an idealogical base like religion (Christians versus Muslims anyone), rather than politics like fascists, communists paradigms

The simple fact is the U.S. can not run a trade imbalance forever.

Yes while there is tons of possible worthless US dollars running around, the wealthy have lots of other options - like the EURO, which will probably be the currency of choice, much like the Germans - having gone through two world wars and a depression creating the very valueless currency you talk about tended to have bank accounts in Luxembourg and Switzerland.

Whilst I agreed there will be an inflationary depression in the US with US currency being worthless, considering the world economy as a whole - the overall effect will be anti-inflationary - i.e. no demand - resource prices drop - the law of supply and demand.

 

Notice that you've taken the Wikipedia quote out of context. You have taken the first part of the sentence and ignored the resrt. That is so typical of you. Here is the full quote (without any bolding): Inflation is an increase in money supply, excluding the increase caused by economic growth.
Generally speaking, increase in the money supply causes aggregate demand to go up which in turn pushes prices upward. This is basic Keynesian economics.
If an increase in the money supply does not lead to an increase in aggregate demand, THERE IS NO INFLATION.
This is why nearly every econ instructor will define inflation as "increase in the general price level of goods and services" rather than "increase in the money supply, excluding the increase caused by economic growth" which is more technical and thus, harder for morons to grasp.

I can give you more examples of failed paper currencies, but that does not mean anything. Bad political and economic policies will corrupt anything.
Let's see, failure of gold standard? Sure. Every country that's ever tried it. Notice that no country adopts it anymore.
The US is just about the most successful economy in the world, and it is a fiat money economy. Hey, look at Japan, too. And just about every leading nations in the world.
Wow, that was easy.

 

Australia will be stuffed - because no one will want our resources - our mining industry is the only thing currently driving our economy - thanks to huge demand from China for coal, gas, oil, iron and our other mineral wealth.

When China's major export market - U.S. goes up in smoke it will be like a stack of domino's. Our economy will collapse, families bankrupted, etc. However we haven't overprinted our dollar so I don't think we will have an inflationary depression you speak of - unless the Aussie government panicks and tries to buy its way out of the depression.

 

Demand of what? Dollars? And what is "aggregate demand?" Since when does demand increase when supply increases? Where in the hell do you get this logic? Demand always goes down when a supply increases, it doesn't matter what commodity it is.

That is the whole point. Governments show a long history of being irresponsible for printing money, so inevitably, once governments become corrupt, or wars start, hyperinflation happens. If Gold and Silver are so weak, why does their price continue to increase as the value of the U.S. Dollar goes down? Simple. Because smart people who don't want to see their money get turned into toilet paper are buying gold, thus driving up the price. Have you got any Gold?

Gold and Silver are no longer used because you can keep people poor with paper money. It is that simple. I don't know about you, but there isn't much difference between the dollar and toilet paper. The only difference is that people "see" the dollar as being valuable. It has no true "intrinsic" value.

Gold and Silver are called "Stores of Value." You seem to have an understanding of economics, so do you know what that means? A Store of value is something that retains its value no matter how bad the economy gets. Rare Artwork is another good example.

Governments keep people poor by controlling them through paper money, and through credit. When you control the printing of the money, you can manipulate the society through a contraction of the money supply. Its basics.

ROFL!!!!!!!! Japan? You mean $10 for a cup of coffee Japan? You mean Japan where most people live packed together in apartments in Tokyo, because the real estate is so expensive that most can't even own it, or buy a house? Japan has one of the highest costs of living in the world, and it isn't just because it is an island nation.

 

I'm sorry, but you are badly in need of an economic lesson. You can think of "aggregate demand" as "collective demand for all goods and services." Generally speaking, when "money supply" increases, "aggregate demand" goes up. Now do you understand?

You are correct, and thank god that we have a decent government compared to some third world countries.

A corrupt government could easily keep people poor on gold standard, or any system for that matter.

I now see where we disagree on: you think that we have a super evil government which likes to keep its people poor while I don't.

I lived in Japan for over 10 years, so I would know a lot more than you. The wealth disparity in Japan isn't nearly as bad as the rest of the world, and it is a very comfortable place to live.
Sorry, but your "ROFL!!!11one!!!" effect only made yourself look silly and ignorant.

 

As for Gold and silver being so great - you are wrong

e.g. For much of the middle ages there simply wasn't enough of the metal to go round - effectively limiting coinage and hindering economic growth.
e.g. real wealth for most of human history has not been based on gold but on LAND -
Gold can be devalued - e.g. Spain brought over huge amounts of gold from the new world yet it managed to destroy their economy - so much for gold being the be all and end all.

 

Powerful banking families, who are also known as the money changers, figured out a long time ago, that you can control people better through paper money rather than Gold or Silver. Precious metals are your friends. I just said in a previous post that one ounce of gold today can buy you 350 loaves of bread, and ounce also purchased 350 loaves of bread during the Middle Ages.

What does this mean? This means Gold and Silver are inflation proof. You can't print "too many gold or silver coins into circulation." You have to work hard to mine the Gold and Silver. The problem with paper money is that governments and powerful banking families can control people through paper money, through inflation.

Even Warren Buffet made a quote about inflation, and how it is ten times worse than the income tax. The government controls you through paper money, because through inflation, they can rob you. If you have a currency that is backed by Gold or Silver, they can't because if the paper money is convertible into Gold, the government will be limited in how much they print.

Inflation hurts poor and Middle Class families. Wealthy people are less affected for a number of reasons:

1. Because they are wealthy, they have more money, so as the prices of goods go up, they still have more money to purchase what they need.

2. The wealthy already know to buy Gold and Silver. They know full well not to keep all their assets in paper. Do you think Warren Buffet, Donald Trump, or Bill Gates have all their money in paper based assets? Of course not.

If the U.S. were to go into Hyperinflation, or even Chronic inflation, the wealthy who already have some of their money in Gold, Silver, or other stores of value will be protected. The reason for this is because, as the dollar continues to fall, their stores of value increase in value to make up for it.

Once the smoke clears, the wealthy can simply sell some of their stores of value to use whatever new paper currency is issue.

There is an old Wall Street saying that goes like this: put ten percent of your money in Gold and hope it doesn't work

What do you think this saying means. It means that if the dollar crashes, or their is a war, and the government is overthrown, and the paper money is useless, then your gold will equal the original value of the paper money you had.

The part about "hope it doesn't work" means that you don't want a war or hyperinflation which would cause your Gold to become this expensive, because that would be your economy is in a state of chaos.

 

This is where you're dead wrong. Our government is very corrupt, and history shows it. We're invading foreign countries and spending too much money on stuff that isn't important.

You think the U.S. is invincible, when this is a load of crap. We are in debt to China, wow that sounds like a real powerful country. The Middle Class is being wiped out, jobs are being outsourced, and the economy is slowly falling apart.

Let me guess, you're a guy who makes lots of money, and because you make money, you think everything is great in the country, because it is great for your personally. If this is what you think, you're living in fantasy land. The reality is that the Middle Class is being destroyed, and people are already struggling to get by.

This is wrong, because if I need an economics lesson, so does Ron Paul, Paul Craig Roberts, Joseph E. Stiglitz, Bernie Sanders, and every other person who sees the U.S. economy for what it is.

The central disagreement between me and you is that you believe our government is great and loving, and I don't believe this. Yeah, our government is real nice when the violate the Constitution and Bill of Rights.

The founding fathers created a Constitution and Bill of Rights because they understood that governments tend to be corrupt. They knew that governments could be tyrannical and brutal towards the people. The Constitution was designed to protect the common man against the government.

Now, today the government has continued to not follow the Constitution. They violate the fourth Amendment, the Tenth Amendment, the list goes on. Since many Americans don't even know what the Constitution says, they don't even realize their rights are being violated.